Nebius Group (NASDAQ: NBIS) shares fell 12.18% to close at $165.47 on Friday, extending their weekly decline to 25.15% as a selloff in rival CoreWeave’s bonds heightened concerns about financing for specialized AI cloud providers, known as neoclouds.
Morningstar warned that these companies could face higher borrowing costs as major technology companies compete for infrastructure funding. It estimated that total cloud infrastructure investment could exceed $1.3 trillion in 2027.
The research firm cautioned that large cloud providers with stronger credit profiles could secure more favorable borrowing terms, leaving smaller operators facing greater financial pressure. It nevertheless said Nebius had a stronger balance sheet than CoreWeave and IREN.
For Nebius, Friday’s decline reversed the 1.29% recovery recorded during the previous session. Approximately 35 million shares changed hands, roughly twice the average daily trading volume of 17.41 million shares over the preceding 30 trading sessions.
Despite the recent selloff, Nebius shares were up 97.7% year to date but closed 44.8% below their June 52-week high of $299.86.
CoreWeave Bond Selloff Highlights Financing Risks
A selloff in CoreWeave’s bonds earlier in the week highlighted concerns about financing AI infrastructure. Bloomberg reported that the company’s unsecured debt maturing in 2032 traded below 80 cents on the dollar on Wednesday, a level commonly associated with distressed debt.
CoreWeave (NASDAQ: CRWV) shares fell 11.91% to close at $61.39 on Friday as questions persisted over the company’s heavy borrowing to finance AI data centers and its ability to service debt if market conditions deteriorate.
In a separate October 14 report, Gartner projected that more than 80% of neocloud providers would cease operating independently by 2030 because of cost pressures and insufficient business differentiation.
Gartner’s forecast points to potential industry consolidation rather than necessarily predicting that all affected companies will go bankrupt or shut down.
Morningstar Points to Nebius’s Lower Debt Exposure
Morningstar said Nebius had significantly less leverage than CoreWeave and IREN (NASDAQ: IREN) and carried minimal net debt.
The firm attributed that position partly to Nebius’s use of equity offerings and convertible securities to raise capital, reducing its dependence on conventional borrowing.
Morningstar maintained its $150 valuation estimate for Nebius while lowering its estimates for CoreWeave to $108 from $115 and IREN to $37 from $43.
Nebius’s own disclosures provide additional context for its financing position. The company reported approximately $8 billion in cash at the end of the second quarter. Capital expenditures totaled about $5.7 billion during the same period, primarily for graphics processing units and data center expansion.
The company also said it expected to receive more than $9 billion in customer prepayments during 2026, which would help fund its infrastructure investments.
In July, Nebius secured approximately $775 million through its first senior secured debt facility, backed by deployed GPU infrastructure and contracted customer cash flows. The financing carries an interest rate of SOFR plus 2.50 percentage points and matures in October 2030.
On August 24, Nebius closed a $5.75 billion private offering of convertible senior notes, comprising $3.45 billion of 0.50% notes due in 2030 and $2.30 billion of 4.50% notes due in 2034.
Separately, the company entered agreements to exchange $800 million of previously issued convertible notes for approximately 15.8 million Class A shares.
The secured debt facility and convertible-note offering provided Nebius with additional funding. In contrast, the separate debt-for-equity agreements involved exchanging existing obligations for shares rather than raising new cash.
